Starting Up in Dallas Corporate Veil Basics
Piercing the corporate veil is a term that often gets used in conversation without being properly explained3 min read
Piercing the corporate veil is a term that often gets used in conversation without being properly explained. To get started, executives need to have a firm understanding of what “piercing the corporate veil” means in order to determine whether they need to take legal action. If you’re a Dallas-based business executive in need of legal counsel familiar with local regulations, then you’ve come to the right place.
The veil-piercing doctrine is a concept that holds an individual liable for acting under the umbrella of a corporation. It's not just about making someone pay but also about holding individuals responsible for intentional disregard of the law. This rule applies to everyone involved in the corporation, such as owners, officers, directors, managers, and other shareholders. In other words, there is a separation between the assets, profits, and losses of the corporation from the individual.
In some cases, the corporate veil might be lifted when one person manipulates a corporation to avoid deals or avoid responsibility for a set of actions. This could mean a situation in which an individual uses a corporation for personal gain rather than for business purposes. That’s where piercing the corporate veil comes in. A Texas court may “pierce the corporate veil” by implementing liabilities to the individual persons inside the corporation if they are determined to be in violation of the law.
The two primary basics of veil piercing are control and fraud. Control is essentially the extent to which an individual has ownership rights over a corporation. If an individual is determined to have a significant degree of control over corporate assets and activities, they might be held liable. Next is fraud. Fraud includes actions or inactions which show an intentional disregard for the law and/or the corporation.
When it comes to the legal definition of piercing the corporate veil, Texas law recognizes several causes of action for such a claim. For example, if an individual in control of the corporation uses the corporation’s assets as personal assets, then that would be a basis for piercing the corporate veil. The same is true if a person in control of the corporation is able to divert the entity’s assets and cause damages to third parties or creditors. In such cases, the individual in control of the organization can be held liable for those damages.
Ultimately, when it comes to the legal process of piercing the corporate veil, it isn’t easy. It requires a thorough examination of all the facts and the application of various legal rules and procedures in order to determine whether or not veil piercing is viable. This examination will most likely include a look into the corporate records, such as minutes and documents dealing with shareholder meetings. It should also include a review of the operations of the corporation as well as the activities of the individuals in control of the corporation. The process also involves a look into the interpretation of the laws of Texas and other jurisdictions.
Because of the complexity of the legal process, it’s absolutely essential for businesses in Dallas to find experienced legal counsel familiar with local regulations. UpCounsel is the ideal platform to connect with experienced and trusted business attorneys. Its attorneys have an average of 14 years of experience and the profiles of its online attorneys display client ratings and reviews of recent work. This makes it easy to find the lawyer who is right for your particular case.
Ultimately, when it comes to getting started on piercing the corporate veil, businesses in Dallas need to find legal counsel that understands local regulations. Having the right advice and assistance can make the entire process much simpler and ensure that your case is handled efficiently and effectively.
Topics:
